Gambling giant MGM Mirage (MGG) intends to build a new 4,000-room megaresort and sprawling urban development in the heart of the Las Vegas Strip, an ambitious plan called "Project CityCenter (search)."

"Our master plan represents a significant new direction for our city and our company," said Terry Lanni, MGM Mirage Inc.'s chairman and chief executive.

The multibillion-dollar project includes three, 400-room boutique hotels, approximately 550,000 square feet of retail shops, dining and entertainment venues, and a 1,650-unit luxury condominium complex.

The massive development will be built on a 66-acre site between the Bellagio and Monte Carlo hotel-casinos, with the first phase creating 12,000 jobs when it's completed in 2010.

Over the next 18 months, MGM Mirage will pick a master architect and select residential and hotel partners.

Once completed, it could be the largest privately funded development in the country, said Jim Murren, MGM Mirage's president and chief financial officer.

With the announcement, MGM Mirage has settled the question of where it would construct the company's next highly anticipated hotel-casino. It had debated putting the megaresort in either Atlantic City or Las Vegas, which won out for its unprecedented popularity that has helped gambling companies reap dizzying profits since 2003. The city is expected to top a record 37 million visitors this year.

Gambling analysts were cautious about MGM Mirage's announcement, which was expected Wednesday.

"It is somewhat outside the box for MGM," said John Mulkey, a Bear Stearns Co. gambling analyst in New York. "They've been more active acquirers than developers in the past, but it certainly seems within the scope of their abilities to do something impressive with the land."

Like the city, MGM Mirage should soon undergo some enormous changes itself.

Lanni has said the planned $4.8 billion merger with Mandalay Resort Group Inc. (search) is on track for the first quarter of 2005.

The deal is awaiting government approval and would create the world's second-biggest gambling company, a title currently held by Harrah's Entertainment Inc (HET).

The MGM Mirage plan is the third megaresort in the works. Las Vegas Sands has started construction on The Palazzo, a $1.6 billion hotel-casino that's scheduled to open in 2007. It sits across the street from Wynn Las Vegas (search), Steve Wynn's latest gambling temple that cost $2.7 billion and is slated to open April 28.

MGM shares were up 10 cents at $59.80 on the New York Stock Exchange — near the high end of their 52-week trading range of $34.05 to $60.07.